OFFICE OF THE PRINCIPAL COMMISSIONER

CENTRAL EXCISE & SERVICE TAX COMMISSIONERATE,

F-BLOCK, RISHI NAGAR,
LUDHIANA
C. No.-V(ST)ADC/

Dated:

SHOW CAUSE NOTICE

M/s Landran Cable , H. No. 70, Village- Lakhnour, P. O. Sohana, SAS Nagar Mohali
(here-in-after referred to as the Noticee) are registered with the Service Tax Department vide
Service Tax Registration No. BOKPG1983FSD001 dated 16.01.2015 under Section 69 of the
Finance Act, 1994 (hereinafter referred to as the Act) but no ST-3 returns have been filed and were
engaged in providing taxable services under the category of Cable Operators as defined in Section
65B (44) of the Act in the specified territorial area for providing the taxable services as mutually
agreed upon by the Noticee and M/s Fastways Transmission Services (P) Ltd., Lajjya Tower, Near
P.F. Building, Sham Nagar, Ludhiana (hereinafter referred to as Fastway).
2.
M/s. Fastway are operating as Multi System Operator (MSO) who receive TV contents from
TV Channels/aggregators and supply those to linked cable operators (LCOs). M/s. Fastway have
entered into an agreement with the Noticee for supply of TV contents against monetary consideration
payable by the Noticee. As per the agreement entered into by M/s. Fastway, the Noticee is
transmitting the signals received from M/s. Fastway as it is without any addition/modification. The
name/logo of Fastway is continuously displayed during the transmission and reception of TV
programme by ultimate consumers and it appears that the Noticee undertook the distribution of
services provided by a person under a brand name or trade name, whether registered or not, of
another person.
3.
Further, as per provisions of Section 65(105)(zs)(valid upto 30.06.2012) of the Act, and under
Section 66B of the Act, (valid w.e.f. 01.07.2012), any service provided or to be provided to any
person, by a cable operator in relation to cable services is taxable service and subject to service tax.
As per provisions of Section 67 of the Act, service tax chargeable on any taxable service with
reference to its value, shall be the gross amount charged by the service provider for such service
provided or to be provided by him. However, Notification No.6/2005-ST dated 01.03.2005 (as
amended) (valid upto 30.06.2012) and /or 33/2012 ST dated 20.06.2012 (valid w.e.f.01.07.2012)
exempts taxable services of a specified aggregate value in any financial year from whole of the
service tax leviable thereon. However, it has been specifically provided in the notification that
nothing contained in this notification shall apply to, taxable services provided by a person under a
brand name or trade name, whether registered or not, of another person. The brand name has been
defined in the above mentioned notifications as:
(A) brand name or trade name means a brand name or a trade name, whether registered or
not, that is to say, a name or a mark, such as symbol, monogram, logo, label, signature, or invented
word or writing which is used in relation to such specified services for the purpose of indicating , or
so as to indicate a connection in the course of trade between such specified services and some
person using such name or mark with or without any indication of the identity of that person.
4.
As the service being provided by the Noticee is under the trade name / trade mark/ logo of
other person (i.e. Fastway), as discussed supra, the benefit of value based exemption as provided
under Notification No.6/2005-ST dated 01.03.2005 (as amended) does not appear to be admissible

and it appears that the Noticee should have discharged the service tax liability on the gross amount
received from the customers/users/consumers to whom the Noticee is providing the service.
However, it has been observed that the Noticee has neither obtained the service tax registration from
the department during the said period nor have discharged the service tax liability on the gross
amount so received from the customers.
5.
Accordingly, the Noticee vide letter C.No. ST-20/Misc/LCO/Moga/01/2015/364 dated
23.03.2015 and 372 dated 01.04.2015 was requested to provide the details of the amount charged
from each subscriber and the details of service tax payment, if any during the financial years 200910, 2010-11, 2011-12, 2012-13 and 2013-14. The Noticee did not respond to the departmental
communication.
6
However, Hqrs. Preventive, Central Excise Commissionerate, Ludhiana provided the details
of LCOs based in the jurisdiction of Range Office, Moga as received from Fastway indicating the
name, address and contact number of the person concerned and the copies of ledger account of LCOs
associated with them and sample copies of the agreements executed with the LCOs for the period
2009-10 to 2013-14.
7.
Further to seek some clarifications, the statement of Shri Rajesh Mehru S/o Shri Dharam
Chand Mehru, resident of H.No, 273, Model Gram, Ludhiana, authorized signatory of Fastway, was
recorded on 09.10.2014 under Section 14 of the Central Excise Act as made applicable to the Service
Tax as per the provisions enshrined in Section 83 of the Finance Act, 1994. Shri Rajesh Mehru, the
authorized Chartered Accountant of Fastway in his statement, interalia, stated that he was working
since 2009 with Fastway and was entrusted the work of supervising, maintenance and finalization of
Financial Accounts of the above said company; that he also supervise the filing of statutory returns
with various Government Departments including service tax department; that Fastway is engaged in
providing the Television Signals both Digital and Analogue and working as MSO; that they provide
signals to LCO who in turn provide the signals to the last mile subscriber; that from the year 200910 (April ,2009) to 2011-12 (Upto March, 2012) only Analogue System was in operation; that in the
analogue system lump-sum bill was raised to the LCO as per the data regarding number of
connections (subscribers) provided by the LCO as there was no Digital Access System; that the
billing was @ Rs.100/- per connection during the said period; that the share of LCO and MSO was
usually on 50% share basis (Rs.100/- each); that from April, 2012 after onset of Digitalization , the
company used to raise the bill on the basis of STB installed in the territory of each LCO @ Rs.100/per STB out of which Rs.65/- being the subscription amount and Rs.35/- as digital rent of STB; that
Rs.100/- was the gross amount of billing which was inclusive of service tax as well;
8.
Sh. Gurdeep Singh S/o S. Jaswant Singh, Resident of House No. 57-B, Rajguru Nagar,
Ludhiana, Managing Director of M/s Fastway Transmissions Pvt. Ltd., Lajjya Tower, Near E.P.F.
Building, Sham Nagar, Ludhiana in his statement recorded on 28.02.2015 inter alia stated that:
i
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M/s Fastway Transmissions Pvt. Ltd., Ludhiana had five directors namely S/Sh. Gurdeep
Singh (himself), Arshdeep Singh (his son), Vishal Chaudhary, Jagjit Singh Kohli and Yogesh
Shah and that the company was incorporated on 11.10.2007;
the company was working as an MSO (Multi System Operator) and were registered with the
Service Tax department vide Registration No. AABCF1854BST001;
MSO was an intermediary between broadcasting companies and LCOs, and received the TV
contents from broadcasters and re-transmitted the same to LCOs; for such re-transmission
purpose they had installed head-end and transponders at their premises at Lajjya Tower,
Ludhiana; and that from there they distributed the signals to LCOs through optic fibre cable

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network laid throughout Punjab, Chandigarh and some parts of Haryana and Himachal
Pradesh;
the LCOs distributed the signals received from the MSOs to each and every subscriber of
their network through their own cable network;
before the digitalization (of cable services), i.e. prior to 31.03.2012, analogue system was in
operation under which analogue signals were provided to LCOs, and MSO used to raise the
bills on LCOs at lump sum basis on the declaration of LCOs regarding the number of
connection/subscribers;
the share of MSO (M/s Fastway Transmissions Pvt. Ltd., Ludhiana) and its LCOs in the
subscription (amount received from ultimate consumers of cable service) during analogue
period was about 50:50 and they (M/s Fastway) paid service tax on the amount so received by
them (M/s Fastway) from LCOs during the period of analogue era;
with effect from 01.04.2012, with the introduction of amendment to the provisions of Cable
Television Regulation Act in 2011 the Digital Addressable System (DAS) was adopted by
their company in a phased manner; that in DAS system each subscriber needed to install a
device called Set Top Box to decode the signals;
under DAS system the MSOs were having full control over the STBs; the STB could start
functioning only after its activation by MSO and, for this purpose, they had installed
Subscriber Management System (SMS) at their premises at Lajjya Tower, Ludhiana and that
SMS system was a computerized system which had LCO-wise details of STB boxes installed
at the premises of each subscriber;
they had imported these STB boxes from China and were charging rent from subscribers for
using STBs but the ownership of the STBs remained with their company;
in DAS regime, they used to raise bills on LCOs on the basis of number of subscribers i.e.
number of STB installed under a particular LCO multiplied by Rs.100/- (inclusive of service
tax); and this Rs.100/- was further bifurcated into two parts i.e. Rs. 65/- in respect of
subscription fee and Rs.35/- for STB rent;
they were paying Service Tax on Rs.100/- (inclusive of service tax); the LCO used to charge
from subscribers on an average Rs.250/- per STB; thus the share of LCO under digital system
was Rs.150/- per STB;
they had yet not covered the entire territory of operation under DAS system; some of their
LCOs located in far flung areas and rural areas were still under analogue system; that the
company was progressively covering the entire area under DAS; that the LCOs working
under analogue system even after 01.04.2012 had started keeping Rs.150/- per subscriber as
their share (out of the amount collected from the subscriber) with effect from 01.04.2012
(thus their share had declined from 50% to 40%);
on being questioned about decreased percentage of their own share after introduction of DAS
system, he stated that it was because after introduction of DAS system their subscriber base
had increased substantially;
W.e.f. 01.07.2014 as per Telecom Regulatory Authority of India (TRAI) regulations, in the
cities which were mandatorily to be covered under DAS in phase II of digitalization, MSOs
were required to collect the cable charges directly from their subscribers under their (MSO)
invoices; thus w.e.f. 01.07.2014 the company had started raising bills directly on subscribers
in three cities i.e. Ludhiana, Amritsar and Chandigarh and this system was called Direct
Accessible System (DAS); now LCOs of the said three cities were raising the bills on their
(MSO) company in respect of their (LCO) share;
W.e.f. 01.07.2014, they were paying service tax on full amount of subscription charged from
subscribers located at Ludhiana, Amritsar and Chandigarh;
They had entered into written agreement with each and every LCO;

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their LCOs were located in Punjab, Chandigarh and parts of Himachal Pradesh and Haryana;
that they were keeping data as per branch network maintained by them such as Ludhiana,
Amritsar, Jalandhar, Chandigarh, Bathinda, Patiala, Shimla and Ambala;
branch-wise soft copy of list of LCOs along with the amount collected from these LCOs (area
wise) had been supplied to Ludhiana Commissionerate and hard copy of the same would be
signed by authorized representative of the company, i.e. Sh. Rajesh Mehru in token of its
correctness.
On further being asked about the logo/brand name of the company and whether the
logo/brand name remained displayed on TV screens of subscribers during transmission of
contents supplied by their company to LCO, he stated that the logo/brand name of their
company was FW which remained continuously displayed on TV screens of subscribers
during the transmission of contents supplied by them to LCO and further to subscribers;

9
A Show Cause Notice was issued to the noticee for the period Apr-2010 to Mar-2014 vide
C.No. V(ST)JC/Ldh/133/2015/7315 dated 17.06.2015 for recovery of Service Tax of Rs. 40,62,343/on the basis of best judgment assessment as provided under Section 72 of the Act by the Joint
Commissioner, Central Excise Commissionerate, F Block, Rishi Nagar, Ludhiana.
10.
For the subsequent period 2014-15, the Jurisdictional Range Office vide letter dated
14.10.2015 requested the Noticee to provide the amount charged by them from the customers on
account of services provided by them and Service Tax paid, if any, for the period 2014-15 and the
Noticee vide their letter dated 30.10.2015 intimated that they have collected an amount of Rs.
77,43,399/- and paid Service Tax of Rs. 9,57,085/- for the financial year 2014-15. From the ST-3
return filed by the party for the period April to September 2014 it has been ascertained that the
Noticee has paid Rs. 3,70,045/- (PLA +Cenvat) on taxable Services of Rs. 29,93,888.
11
In the meanwhile the Jurisdictional Range office vide letter C.No. ST-20/Misc/LCO/
Moga/01/2015/448 dated 08.12.2015 and 496 dated 01.01.2016 also requested the Fastway to
provide the details of the amount raised by Fastway to the LCO and the amount retained by the LCO
during the period 2014-15. The Fastway vide their e-mail dated 06.01.2016 provided the copies of
Noticees ledger account for the period 2014-15. Further, Range Office vide letter of even No. 552
dated 13.01.2016 requested Fastway to clarify as to whether the amount mentioned is the amount
paid to Fastway or the amount retained by the LCO. Fastway vide their letter dated 11.02.2016
clarified that the soft data regarding LCO mailed to Range Office on 06.01.2016 shows the amount
of billing raised by Fastway to LCOs during the period under consideration and has the following
figures.
(a)
Value means value of services provided to LCO.
(b)
Service Tax means Service Tax on Service provided.
(c)
Gross Total means total of both (a+b) i.e. value of service provided plus service tax.
LCO collect the gross amount of bill raised by Fastway from end consumer.
LCO retained his share and the balance paid to Fastway.
From the above, it appears that MSO i.e. Fastway is only billing the amount pertaining to
service provided to LCO only, however the LCO collects the gross amount from the end consumer
and after retaining his share, pays the balance amount to Fastway as billed by them.
12.
Scrutiny of the data received from Fastway reveals that the amount for which bills have been
raised on the Noticee for the period April to September 2014 is as under:-

Sr.
No.
1

Period

Amount for which the payment made by the Noticee to Fastway

2014-15
(Upto
Sep-2014)

28,41,600/-

13.
On scrutiny of ST-3 Return (April-Sept 2014) filed by the Noticee, it appears that the noticee
in their ST-3 return declared the value of taxable services as Rs. 29,93,888/- and paid Service Tax of
Rs. 18,823/- in cash and Rs. 3,51,222/- from Cenvat credit (Total Service Tax shown as paid in ST-3
Return - Rs. 3,70,045/-). The Noticee was not entitled for Cenvat Credit of Service Tax paid to
Fastway as the amount i.e Rs. 29,93,888 on which Service Tax has been calculated by the noticee
appears to be the amount retained by them and the amount charged by Fastway i.e. Rs. 28,41,600/was not included for calculating their Service Tax laibility. The noticee were entitled for Cenvat
credit only, had the Service Tax payable by them been calculated on the amount collected from the
ultimate subsciber i.e. the amount charged by Fastway from the Noticee plus the amount retained by
the Noticee. However, they have availed CENVAT credit of Rs. 3,51,222/- i.e the Service Tax
charged by Fastway on the amount charged from them. Since, the Noticee have not assessed their
Service Tax liability correctly, service tax liability is to be worked out, in terms of the provisions of
Section 72 of the Act as was done in the previous SCN issued to the Noticee by taking the amount
paid by the Noticee to the Fastway as 40% of the amount received by the Noticee for provision of the
taxable services. Accordingly, the details of service tax liability in respect of the Noticee are as
under:-

S.
No.

Amount
for which
bill raised
by Fastway
for
subscriptio
n
(40%)
2841600

Service
Tax
already
Net Service
Service Tax
paid as Tax
payable
shown
recoverable
in ST-3
return

Amount
which
is
retained by
the Noticee
(60%)

Total amount
collected from
ultimate
subscriber

Rate
of
Servic
e Tax

42,62,400

71,04,000/-

12.36% 8,78,055/-

370045

5,08,010/-

Thus, by application of best judgment assessment under Section 72 of the Act, the value of
taxable Service provided by the Noticee comes to Rs. 71,04,000/- as arrived on the basis of statement
of Sh. Gurdeep Singh S/o S. Jaswant Singh, Resident of House No. 57-B, Rajguru Nagar, Ludhiana,
Managing Director of M/s Fastway Transmissions Pvt. Ltd., Lajjya Tower, Near E.P.F. Building,
Sham Nagar, Ludhiana recorded on 28.02.2015 by applying the 40/60 ratio. Service Tax of Rs.
5,08,010/- appears to be recoverable from the Noticee under Section 73 of the Act.
14.
Further, the Noticee were requested vide range office letter 29.03.2016 to provide copies of
invoices on the basis of which Cenvat Credit was availed by the noticee in financial year 2014-15.
The counsel of the noticee submitted copies of Invoices for the month of Apr-2014 and May 2014
only but failed to furnish the invoices for the remaining 10 months of the financial year 2014-15. As
per invoices for the month of April and May, 2014, Cenvat Credit of Rs. 1,17,074/- was admissible to
the noticee as per Rule 9(i)(f) of the Cenvat Credit Rules 2004, as the notice was entiltled for the
Cenvat Credit only on the basis of an invoice, a bill or challan issued by a provider of Input Service
i.e M/s Fastway. The Balance amount of Cenvat Credit of Rs. 2,34,148/- availed and utilized by the
noticee appears to be not admissible to them as no supporting documents have been provided to the
Range Office and appears to be recoverable from the Noticee under Rule 14 of the Cenvat Credit
Rules, 2004. Hence, it appears that Cenvat Credit of Rs. 2,34,148/- has been availed and utilized by

the noticee by reason of fraud, collusion, willful mis-statement or suppression facts with an intent to
evade payment of Service Tax.
15
From the above, it appears that the Noticee have failed to pay service tax amounting to Rs.
5,08,010/- for providing the said taxable services under a brand name, whether registered or not, of
another person to various users in contravention of the provisions of Sections 68 of the Act read with
Rule 6 of the Service Tax Rules, 1994 which appears to be recoverable from them under Section 73
of the Finance Act, 1994. The Cenvat Credit of Rs. 2,34,148/- availed and utilized by the noticee also
appears to be recoverable from the Noticee under Rule 14 of the Cenvat Credit Rules, 2004. On the
said Service Tax and wrongly availed/utilized Cenvat credit, interest also appears to be recoverable
from the Noticee under Section 75 of the Act. The Noticee also appears to be liable for penal action
under Section 78 of the Act as the Noticee in the ST-3 returns filed by them / figures supplied by
them, appears to have suppressed the value of Taxable Services provided by them and have not
provided the correct amount collected from the subscribers. The noticee willfully suppressed the
value of taxable services by not adding the amount charged by Fastway to the amount retained by the
Noticee with an intent to evade payment of Service Tax. The Noticee also appears to be liable to
penal action under Section-77 for non supplying of the invoices based on which Cenvat Credit has
been availed by them. Further, the noticee also appears to be liable to penal action under Rule 15(3)
of the CENVAT Credit Rules, 2004.
16.

Thus, it appeared that the Noticee have contravened the provisions of:

(i)
Section 72 of the Act in as-much-as they have failed to assess the correct value of Taxable
services provided by them, as explained in foregoing paras for the period Apr-2014 to Sep-2014;
(ii)
Section 68 of the Act read with Rule 6 of the Service Tax Rules, 1994 in as-much-as they
have failed to pay Service Tax amounting to Rs. 5,08,010/- as explained in foregoing paras for the
period Apr-2014 to Sep-2014, as calculated in the manner mentioned at para-13 above to the credit of
the Government within the stipulated time limit;
(iii)
Rule 9 of the Cenvat Credit Rules 2004, in as much as they appears to have wrongly availed
Cenvat Credit of Rs. 2,34,148 as mentioned in Para 14 above.
Thus, the noticee have rendered themselves liable to penal action under Section-77 and
Section-78 of the Act and Rule-15(3) of the Cenvat Credit Rules, 2004 for contravention of the
provisions referred supra.
17.
Now, therefore, M/s Arora Cable TV , # Rama Complex 2 nd Floor, Old Sabji Mandi
Market, Moga are hereby called upon to show cause to the Additional Commissioner, Central
Excise Commissionerate, F-Block, Rishi Nagar, Ludhiana within 30 days of receipt of this notice,
as to why :
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The provisions of Section 72 of the Finance Act, 1994 should not be invoked to assess
the taxable value and Service Tax payable by the noticee;
Service tax amounting to Rs. 5,08,010/- (Rupees Five Lacs Eight Thousand and
Ten only) should not be recovered from them under Section 73 of the Finance Act,
1994.
Cenvat Credit of Rs. 2,34,148/- (Rs. Two Lacs Thirty Four Thousand One
Hundred & Forty Eight only) should not be recovered from them under Rule 14 of
the Cenvat Credit Rules 2004 read with Section 73 of the Act.
Interest on the Service Tax and Cenvat Credit recoverable should not be recovered
from them under Section 75 of the Finance Act, 1994.

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Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994
for suppressing the value of taxable services with intent to evade payment of Service
Tax;
Penalty should not be imposed upon them under Rule 15(3) of the Cenvat Credit
Rules, 2004 read with Section 78 of the Act.
Penalty should not be imposed upon them under section 77 of the Finance Act, 1994
for contravention of the provisions explained supra.

18.
The Noticee are further required to produce at the time of showing cause all the evidence
documentary or otherwise upon which they intend to rely in support of their defence. They should
also mention in their written explanation whether they wish to be heard in person or through their
authorized representative/counsel before the adjudication of the case. If no mention is made about
this in their written explanation, it shall be presumed that they do not desire a personal hearing in this
case.
19.
The Noticee should also note that if no cause is shown against the action proposed to be taken
against them within the stipulated period of 30 days or if the Noticee or their authorized
representative/counsel do not appear before the adjudicating authority on the date and time fixed for
personal hearing without sufficient cause being shown, the case would be decided ex-parte on the
basis of evidence already on record without any further reference to them.
20.
This show cause notice is issued without prejudice to any further action that may be taken
against the Noticee either in the case or any other case under the provisions of Finance Act, 1994 and
the Service Tax Rules made there under, or any other Act or Law for the time being in force in India.

Additional Commissioner
Through Division Office:M/s Arora Cable Tv
# Rama Complex, 2nd Floor,
Old Sabji Mandi Market, Moga.
Copy to:1.
The Assistant Commissioner, Central Excise & Service Tax, Division, Moga alongwith
copy meant for noticee. It is requested that SCN may please be got delivered alongwith
Annexure(s) and RUD(s) under proper receipt. Receipt so obtained may please be sent to
this office for record.
.
2.
The Superintendent, Central Excise & Service Tax Range, Moga

Superintendent (Adj.)
Additional Commissioner Competency